Buyers & Sellers Of Luxury Wines

Tag: Australian wine

People all over the world are increasingly getting a taste for Australian wine. How do we know this? New figures indicate that Australian wine exports, especially in the luxury category, boomed in 2016.

Top destination

Keep in mind that there are key differences between old and new world wine-making countries. The wine production industries in new world countries like Australia are less established, meaning that they’re more open to modernisation and to using technology to improve their techniques. Since the 18th Century, Australia has used innovation to gain a reputation as a top wine-making country.

Australia possesses the perfect climate for wine-making, meaning the product is produced in every Australian state. Various grapes are used to make Australian wines including Shiraz, Cabernet Sauvignon, Merlot, Chardonnay, Sauvignon Blanc and Riesling. Historically, Australia consumes more of its own wine than it exports, but this is changing, new data shows, thanks to the Chinese market.

Chinese interest

According to Reuters, a news agency, new statistics from industry group Wine Australia, the country’s wine exports to China climbed by 40% in 2016. The People’s Republic is now the primary export destination for Australian wines. Increasing Chinese interest boosted Australia’s global wine exports last year, at a rate of 7%, so shipments were valued at US$1.67bn across the last year.

Explaining this trend Greg Corra, the Managing Director of wine exporter Inland Trading, which is based in Canberra, said: “Rather than drinking the super-expensive French wines, they were turning to Australian wines which were more affordable.” We should note, however, that France still dominates China’s wine sector, with a market share that’s around double the size of Australia’s.

Good progress

It’s also important to note that the growth of the fine wine market, supported the expansion of Australia’s wine industry as a whole. It was the fastest growing export segment in 2016. Additionally, Australian wine shipments to both the US and the UK, both key markets for the land down under, increased during this period. However, Australia’s wine exports to Hong Kong dropped by 16%.

The Hong Kong share of the market declined, because many exporters are now re-routing stock to the Chinese mainland. China used to charge 20% tariffs on wine imports, but this have now declined to below 90%. The People’s Republic recently enacted another tariff reduction, which according to wine experts could allow the country’s wine shipments to China climb by an additional 20% in 2017.

Sample fine wines

It is clear, therefore, that fine Australian wines are becoming more popular worldwide, especially in China, which itself is rapidly developing a thirst for our favourite tipple. If you want to see why consumers favour luxury Australian vintages, we can help you out. You can buy Penfolds Grange wine, one of the country’s most beloved luxury brands, from Ideal Wine Company online right now!

Brexit has caused shock waves and uncertainty across various industries around the world. But it could potentially be beneficial to Australia’s wine makers, the Ideal Wine Company has found.

Strong trade relationship

According to the Australian government, “Australia has a significant relationship with the UK underpinned by our shared heritage, common values, closely aligned strategic outlook and interests.” Data quoted by Business Insider in 2014 shows that the UK is Australia’s seventh largest two way trading partner, ranking ahead of the EU’s largest economy Germany.

Throughout recent years, British consumers have developed a taste for Australian wine. Official data suggests that the UK is the biggest export destination for wine produced in the land down under, by volume. Ideal Wine Company provides a selection of Australian wines, so we have seen first-hand how the country’s finest vintages are becoming increasingly popular with British wine enthusiasts.

Cutting wine tariffs

Producers believe that Brexit could make Australia’s UK wine trade even more profitable. National news agency ABC reports that Wine Australia (WA), the national industry body, has suggested that Brexit could make it less expensive for local wine-makers to sell their products in the UK.

At present, Australian wine-makers who export their bottles to the UK have to pay taxes called tariffs, while their European equivalents don’t, because the UK is part of the EU’s ‘single market.’ However WA argued that the tariffs may be discontinued when the UK departs the EU, making Australian bottles more cost-effective for UK consumers and generating more money for the industry.

Cautious optimism

Yet some producers, such as Larry Cherubino in Western Australia, are a bit more cautious. Commenting, he said: “We’re hoping that all these changes augur well for the Australian wine industry in terms of there being a more level playing field between us and the rest of Europe, but we really don’t know what the outcome is going to be.”

WA head Larry Jorgensen expressed similar sentiments. He argued that Australian wine producers will need to keep a close eye on the value of the British pound going forward. Adding further, Jorgensen said that “If it stays low for a period of time then that will affect our ability to be competitive… We live in hope, I mean we are farmers after all and we’ve got to be eternally optimistic.”

Striking favourable terms

It is hard to assess, at this point, whether Brexit will benefit the Australian wine industry. Australia will be required to negotiate new trade deals with both the UK and the EU over the next few years. The country’s government will need to strike favourable trade terms to capitalise on high British demand for Australian wine and ensure its producers benefit from Brexit.

Australia has spent the last 200 years making wine. Its efforts are starting to pay off, as the land down has started to develop a reputation for making excellent wine in the past few decades. Now it produces vintages that rival those made by established powers in the fine wine trade such as France, Spain and Italy.

There are regions in the south of Australia that have the temperate climate and ideal soil types needed to produce first class vino. This has allowed areas such as Victoria, Queensland, Tasmania and New South Wales to become famous for their ability to produce quality grapes such as Shiraz, Cabernet Sauvignon, Chardonnay, Merlot and Pinot Noir.

The AGWA Wine Export Approval Report March 2015

New export figures published in a report by the Australian Grape and Wine Authority (AGWA) show that demand for Australian fine wine has continued to surge. AGWA’S Wine Export Approval Report March 2015 shows that the land down under registered a 3.6% rise in volume and a 3.9% in the value of its wine exports between March 2014 and March 2015.

AGWA CEO Andreas Clarke was quoted by Drinks Business explaining the role fine wine played in this surge. Clarke explained that “some of the strongest growth is seen in the premium price segments.” The CEO went on to explain that “while the above A$7.50 price segment accounts for just 5% of total export volume, the value share is considerably higher at 27%.”

Demand for Australian fine wine has risen in Asia

Clarke also pointed out that a fair share of this growth can be attributed to the rising popularity of Australian fine wines in Asian markets such as China. The world’s largest continent accounted for more than half of exports of Australian wines priced above A$7.50 in the year to March 2015; a rise of 13% from the year before.

Andrew Caillard MW, who established Langton’s (Australia’s fine wine classification system) agreed with Clarke. He was quoted by another Drinks Business article saying that “Australia is really making its best wine now. We’re seeing iconic vintages year after year and Asia, especially China, is leading the demand for top-end wine.”

Find out why everybody loves Australian fine wine

Therefore demand for Australian fine wine is rising across the world, especially in Asia, because people are coming to realise what a fantastic product it really is. Find out why it’s rising in popularity by sampling a selection of Australian fine wines from the Ideal Wine Company.

The BBC reported that a “little-known bottle of red” can go for as little as one Australian Dollar (or 53p).

Professor Kym Anderson, of the Wine Economics Research Centre in Adelaide said “Whatever you fancy, if you compare your purchase to an average 350m of water going for about A$2.50, then you’ve certainly got wine that’s cheaper than buying a bottle of water.”

The situation according to some experts is quite dire. However, this isn’t by any means the first time wine in Australia has been sold at such prices.

What are the causes of this fall in price?

A number of factors have conspired in recent times to lower the price of wine Down Under.

A glut of products in the domestic markets, a drop in international demand and exchange rates have all played their part to ensure that much locally produced Australian wine is – in certain instances – cheaper than water.

Another factor keeping the price on wine low is the country’s tax on alcohol which varies according to the product. In addition to this, a duopoly between two big supermarkets, Woolworths and Coles – who between them control more than 70% of all retail wine sales – plays its part.

Final thoughts…

Ultimately, the incredibly low price of a number of Australian wine seems to be acceptable to certain growers whilst also being good news for Australian wine drinkers who are looking to buy a bottle for under $10.